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Adjudication: waiver in natural justice

Where an actual or suspected breach of natural justice occurs, by far the most common option adopted is to participate in the adjudication until its conclusion. Once the decision is given, a party may raise the challenge in enforcement proceedings. This approach is echoed in case law: whereas there are scores of cases in respect of challenges to the adjudicator’s jurisdiction made before or during the adjudication, there are almost none in respect of challenges arising out of a suspected breach of natural justice.

That said, it is always advisable to raise a suspected breach of natural justice with the adjudicator and the other party as soon as it is discovered. Not only will the notification serve as evidence should the issue arise in enforcement proceedings, but it also provides the adjudicator with the opportunity to consider the suspected breach and, if he agrees with it, resign. In some circumstances, failing to raise an issue that has or is about to give rise to a breach of natural justice may act as a waiver to raising it later.

The application of waiver in the context of the adjudicator’s jurisdiction is not one that directly transposes to natural justice. A party may only waive its right in respect of a natural justice challenge if, once it knows or is taken to know about the grounds for the challenge, it acts in a way that clearly and unequivocally demonstrates that it does not intend to rely on that natural justice challenge. In the case Farrelly (M & E) Building Services Ltd v Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC), the court put it in this way:

In principle a party may waive a failure by an adjudicator to comply with the rules of natural justice, although the natural justice challenge differs in important respects for a challenge to the jurisdiction of an adjudicator. For there to be a waiver it is evident that a party must be taken to be aware of or be taken to be aware of the right of challenge to the adjudicator’s decision. The second step requires a clear and unequivocal act which, with the required knowledge, amounts to a waiver of right…

In the case of a natural justice challenge the party has to know or be taken to know that the grounds for a natural justice challenge have arisen. However there has then to be some clear and unequivocal act by that party to show that it does not intend to rely on that natural justice challenge before there can be a waiver

This rule was tested in the recent case of CSK Electrical Contractors Ltd v Kingwood Electrical Services Ltd [2015] EWHC 667 (TCC). The defendant engaged the claimant to carry out electrical works in one of the stands and the executive boxes at Twickenham. The parties fell into dispute and CSK commenced two adjudications. Kingwood failed to comply with the adjudicator’s decisions and so CSK commenced enforcement proceedings. Various points were raised by Kingwood, including the argument that the adjudicator breached the rules of natural justice because the adjudicator's timetable was too quick and put too great a strain on the defendant’s resources. The court disagreed that the short timetable amounted to a breach of natural justice on the part of the adjudicator, but in any event, the court held that the defendant had waived its right to rely on any breach of natural justice. The court was satisfied that the defendant was aware of the alleged breach of natural justice and, by paying the adjudicator’s fees and the seeking of corrections to the adjudicator’s decision, it committed ‘clear and unequivocal’ acts. The lesson from this case is that if a suspected breach of natural justice arises, it should be raised immediately and the party should reserve its right to challenge the adjudicator’s decision subsequently.